The International Accounting Standards Board has released some of the findings from a survey it recently conducted on financial disclosures in which it asked accountants and financial statement users what factors are contributing to disclosure overload.

The IASB received 225 responses from respondents across Africa, Asia, Europe and North America. Approximately 50 per cent of the responses came from preparers and approximately 20 per cent came from users of financial statements.

The survey found that over 80 percent of respondents agreed that improvements could be made to the way financial information is disclosed. Half of those respondents felt that such improvements were required across all parts of the annual report, and not just the financial statements.

Most preparers of financial statements identified the primary problem as disclosure requirements being too extensive with not enough being done to exclude immaterial information—which has been referred to as disclosure overload. Many users of financial statements felt that preparers could do more to improve the communication of relevant information within the financial statements, rather than leaving users to sift through large amounts of data.

The survey uncovered a wide range of views on the underlying causes of the problem. Some respondents felt that more could be done to improve the way in which accounting standards are set out. Others expressed concern that preparers, auditors and regulators are approaching financial reporting as an exercise in compliance rather than as a means of communication.

“We very much appreciate the detailed and high quality feedback provided by respondents to this survey,” said IASB chairman Hans Hoogervorst in a statement. “That feedback indicated a need for standard-setters, auditors, preparers, regulators and investors to work together in order to deliver much-needed improvements to all disclosures, not just those contained within the financial statements.”

The IASB plans held discussion forum on disclosures Monday. A recording of the event will be posted to the IASB’s Web site Tuesday. 

The full results of the online survey will be published as part of a feedback statement in the first quarter of the year summarizing feedback received from the disclosure forum and how the IASB intends to respond to that feedback.

In the U.S., the Financial Accounting Standards Board has also been working to develop a disclosure framework while conducting its own outreach efforts with the Center for Audit Quality (see FASB Readies Framework for Financial Statement Disclosures and FASB Releases Summary of Disclosure Effectiveness Forums).

The subject has also received attention in the United Kingdom. “Finding the balance between too much financial disclosure and too little will be highly challenging, as users of financial reports have different needs,” said Dr. Nigel Sleigh-Johnson, head of the Financial Services Faculty at the Institute of Chartered Accountants in England and Wales.

“So-called disclosure overload will not be resolved unless it is tackled together by all the bodies who impose disclosure requirements. That way it may be possible to reduce duplication and unnecessary complexity. Making more of technological advances may also enable companies to report more effectively and clearly. A good starting point would be to reach a better understanding of the objective of annual reports and on who they are intended for. It is unrealistic to expect the needs of all users to be met in full by a single set of disclosures. Key information should be easily accessible to less sophisticated users, while users who want much more extensive information should have access to what they need. This may require radical restructuring of disclosures and how they are presented.”

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